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Heineken Uncertain About Year-End Despite Summer Recovery

Published on Oct 28 2020 1:06 PM in Drinks tagged: Heineken

Heineken Uncertain About Year-End Despite Summer Recovery

Heineken NV performed better than expected over the June-September quarter with a surprising increase in beer sales in the Americas, but said that the COVID-19 pandemic is still too uncertain to provide a reliable 2020 outlook.

The world's second-largest beer maker said that it expects a volatile final quarter of the year as new restrictions have been imposed by many countries in Europe, including closures of bars and restaurants.

In Asia, new restrictions are in place in Malaysia, Myanmar and Sri Lanka.

The brewer of Europe's biggest selling lager, Heineken, along with Tiger and Sol, withdrew its 2020 guidance in April, as the pandemic spread. On Wednesday October 28, it said that it would only provide a general overview of the rest of the year.

Heineken said that it will earn less money for a given volume in a shift from bar to store purchases, while costs were likely to be higher than a year earlier, with kegs cheaper to produce, reuse and ship than cans and bottles.

The brewer has already reduced discretionary spending and some capital expenditure.

It said that it will start restructuring its head and regional offices in 2021 with the aim of cutting personnel costs by 20%.

Beer Volumes

Overall, Heineken's beer volumes declined by 1.9% on a like-for-like basis in the third quarter. That compares with an average expected drop of 5.9% in a company-compiled poll.

All regions fared better than expected, except for Asia, with drinking down in its second most important market, Vietnam.

In the Americas, beer volumes were up 2.5%, with low teen percentage growth in the United States, where distributors replenished inventories, and Brazil, where Heineken is expanding after a 2017 acquisition made it the second largest player.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

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